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DECREE No

DECREE No. 34/2001/ND-CP OF JULY 6, 2001 PROMULGATING THE REGULATION ON BIDDING FOR OIL AND GAS PROSPECTION, EXPLORATION AND EXPLOITATION PROJECTS

THE GOVERNMENT

Pursuant to the Law on Organization of the Government of September 30, 1992;

Pursuant to the July 6, 1993 Petroleum Law and the June 9, 2000 Law Amending and Supplementing a Number of Articles of the Petroleum Law;

At the proposal of the Minister of Planning and Investment,

DECREES:

Article 1.- To promulgate together with this Decree the Regulation on bidding for oil and gas prospection, exploration and exploitation projects.

Article 2.- This Decree takes effect 15 days after its signing.

Article 3.- The Ministry of Planning and Investment shall assume the prime responsibility and coordinate with the Ministry of Finance and the concerned ministries and branches in guiding the implementation of this Decree.

Article 4.- The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government, the presidents of the People�s Committees of the provinces and centrally-run cities, Vietnam Oil and Gas Corporation and concerned organizations shall have to implement this Decree.

On behalf of the Government

Prime Minister
PHAN VAN KHAI

REGULATION ON BIDDING FOR OIL AND GAS PROSPECTION, EXPLORATION AND EXPLOITATION PROJECTS

(Promulgated together with the Government�s Decree No. 34/2001/ND-CP of July 6, 2001)

Chapter I

GENERAL PROVISIONS

Article 1.- Scope of regulation

This Regulation prescribes the bidding for oil and gas prospection, exploration and exploitation projects in order to select partners for signing oil and gas contracts according to the provisions in Clause 4, Article 1 of the Law Amending and Supplementing a Number of Articles of the Petroleum Law.

Article 2.- Objects of application

This Regulation applies to the bidding for oil and gas prospection, exploration and exploitation projects in mainland areas and offshore blocks, including the areas already returned under the provisions of Article 19 of the Petroleum Law, for which partners have not yet been selected or oil and gas contracts have not been signed.

Organizations and individuals that want to sign oil and gas contracts in the forms prescribed in Article 15 of the Petroleum Law shall all have to comply with the provisions of this Regulation.

Article 3.- Term interpretation

In this Regulation, the following terms shall be construed as follows:

1. "Bidders" mean organizations, individuals and oil and gas conglomerates that register for participation in bidding for oil and gas prospection, exploration and exploitation projects.

2. "Bid-soliciting party" means the agency organizing the bidding as specified in Article 21 of this Regulation.

3. "Minimum workload commitment and minimum financial commitment" mean the minimum workload and minimum expense amount corresponding thereto, which a bidder estimates and commits itself to fulfill in the first stage of the prospection and exploration period in the oil and gas contract.

4. "Oil and gas conglomerate" means a combination of 2 or more organizations and/or individuals, whereby at least one organization or individual is carrying out at least two contracts on oil and gas prospection, exploration and exploitation anywhere, which is established on the basis of agreement for participation in bidding for oil and gas prospection, exploration and exploitation projects in Vietnam.

5. "Share of oil and gas profit for the host country" means the amount of profit shared to the State, excluding the amount shared according to the capital contribution percentages to Vietnam Oil and Gas Corporation or its authorized member companies in the capacity as bidders.

Article 4.- Bidding forms

The bidding forms shall be applied on the principles of wide-range international competition without the pre-qualification step. All organizations and individuals meeting the conditions mentioned in Article 5 of this Regulation shall be entitled to participate in bidding.

Article 5.- Conditions for bid participation

Bidders shall have to satisfy the following conditions:

- Having financial and technical capabilities as well as professional experiences in the field of oil and gas activities.

- Currently performing at least 2 oil and gas prospection, exploration and exploitation contracts anywhere.

Organizations and individuals that fail to satisfy the above-said conditions but want to participate in oil and gas activities in Vietnam shall have to associate with the qualified organizations and individuals to form an oil and gas conglomerate according to the provisions in Clause 4, Article 3 of this Regulation. In this case, the qualified organizations and individuals shall represent all the concerned parties in the oil and gas conglomerate to participate in bidding.

Article 6.- Bidding norms

The bidding norms stated in a bidding dossier include:

- The share of oil and gas profit to the host country;

- The minimum workload commitment and minimum financial commitment.

Based on the concrete potential of each area or each block, the Prime Minister may decide to add one or a number of other bidding norms such as the participation of Vietnam Oil and Gas Corporation, the oil and gas expense recovery rate, signature commission, production commission, document reference charge and training expense.

The rates of natural resource tax, enterprise income tax and other payable taxes shall comply with the law provisions, not be subject to bidding and be announced in the bidding dossiers.

Chapter II

BIDDING PROCEDURES

Article 7.- Bidding procedures

The bidding procedures include the following steps:

- Elaboration and approval of the bidding plan;

- Notification of the invitation for bids;

- Registration of bid participation;

- Distribution of bidding dossiers;

- Reception, opening and evaluation of bids;

- Appraisal, approval and announcement of bidding results;

- Negotiation on the oil and gas contract;

- Ratification and signing of the oil and gas contract.

Article 8.- Bidding plan

The bid-soliciting party shall elaborate a bidding plan for areas or blocks, send it to the Ministry of Planning and Investment for appraisal and submission to the Prime Minister for approval.

The bidding plan shall include the following contents:

- The preliminary evaluation of the oil and gas potential of each area or block;

- The bidding schedule;

- The bidding norms;

- The bid-evaluation method.

Article 9.- Notification of the invitation for bids

Based on the already approved bidding plan, the bid-soliciting party shall issue a bid-invitation notice. The bid-invitation notice shall be published for 10 consecutive days on two daily papers and on information network in Vietnamese and English languages. It may also be sent directly to organizations and individuals interested in blocks open for bid invitation.

The bid invitation notice shall consist of the list of areas or blocks open for bid invitation, their coordinates and boundaries as well as the maps thereon; the timetable for document reference and other details on the bid-invitation procedures.

Article 10.- Registration of bid participation

The bidders shall send the bid-soliciting party bid-participation registrations, which are made according to the form set by the latter. The time limit for the registration of bid participation shall not exceed 60 days as from the last day of publishing the bid-invitation notice.

When registering bid participation, the bidders shall have to explain their financial and technical capabilities and supply documents on the formation of the oil and gas conglomerate, if such a conglomerate participates in the bidding.

The bidders may receive the bidding dossiers and have the right to access to the documents already listed in the bidding dossiers after registering bid participation.

Article 11.- Bidding dossiers

Based on the already approved bidding plan, the bid-soliciting party shall prepare bidding dossiers and distribute them to the bidders.

The contents of the bidding dossiers include:

1. The bidding norms prescribed in Article 6 of this Regulation;

2. The bid evaluation method prescribed in Article 16 of this Regulation;

3. The timetable of the bidding process and other details on bidding procedures;

4. The list of basic documents and information on the areas or blocks open for bid invitation.

Article 12.- Bids

Bids shall be prepared by the bidders based on the bid-soliciting party�s requirements in the bidding dossiers. A bid�s contents include:

1. The bidder�s offers regarding the bidding norms prescribed in Article 6 of this Regulation;

2. The commitments to fulfill the fixed norms, including the obligation to pay natural resource tax and other taxes according to law provisions.

Each bid shall be made in two copies in Vietnamese and English languages. The currency used in the bids shall be US dollar.

The bidders shall send their bids to the bid-soliciting party within 60 days as from the date of distributing the bidding dossiers. The bids shall be considered valid when they meet all the requirements of the bidding dossiers and are submitted within the prescribed time limit. Those bids submitted late without notification made 15 days before the prescribed time limit and without acceptance by the bid-soliciting party shall be considered invalid.

Article 13.- Bid opening

The bid-soliciting party shall have to organize bid opening strictly according to the time prescribed in the bidding dossiers. Participants in the bid opening include the representative of the bid-soliciting party and members of the bid-evaluating team as specified in Article 15 of this Regulation. The bidders� representatives may also attend the bid opening.

Article 14.- Keeping confidentiality of bids

The bid-soliciting party and bid-evaluating team shall have to manage bids according to the regime of managing "confidential" dossiers and ensure the confidentiality of all information in the bids throughout the bidding process. All supplements made by bidders to already opened bids shall be invalid and shall not be considered.

Article 15.- Organization of bid evaluation

The bid-soliciting party shall set up a bid-evaluating team, consisting of the bid-soliciting party�s specialists. If deeming necessary, the bid-soliciting party may invite specialists from ministries and branches to join the bid-evaluating team. The working regulation of the bid-evaluating team shall be stipulated by the bid-soliciting party. The bid evaluation shall be conducted within 20 working days as from the date of bid opening.

Article 16.- Evaluation of bids

The evaluation of bids shall be based on the bid-evaluation method in the bidding plan already approved by the Prime Minister. The bid-evaluation method shall be notified to the bidders in the bidding dossiers and shall not change in the bid-evaluation process.

The bids shall be ranked according to the bid-evaluation results. The first-ranking bidder shall be the bid winner and entitled to negotiate an oil and gas contract with Vietnam Oil and Gas Corporation. Where the two parties fail to reach agreement on the oil and gas contract within the time limit prescribed in Article 19 of this Regulation or the bid winner voluntarily withdraws, the second-ranking bidder shall be invited to negotiate the oil and gas contract on the basis of the conditions offered by such bidder.

Article 17.- Appraisal of bidding results

The Ministry of Planning and Investment shall assume the prime responsibility for appraising the bidding results. The appraisal of the bidding results shall be conducted by an inter-branch working team, consisting of representatives of the Ministries of: Planning and Investment; Finance; Justice; Science, Technology and Environment, and Construction; the State Bank of Vietnam and the Government�s Office. The working regulation of the inter-branch working team shall be stipulated by the Ministry of Planning and Investment. The appraisal of the bidding results shall be conducted within 15 working days as from the time the documents related to the bidding results are fully received.

The Ministry of Planning and Investment shall submit to the Prime Minister the bidding result-appraisal report.

Article 18.- Notification of the bidding results

The bid-soliciting party shall notify the bidders of the bidding results and notify the bid winner of the plan for negotiation of the oil and gas contract according to the provisions of the Petroleum Law.

Article 19.- Negotiation of the oil and gas contract

Vietnam Oil and Gas Corporation shall have to negotiate with the bid winner on the oil and gas contract on the basis of the bidding norms in the bid already appraised and approved according to Article 17 of this Regulation. The negotiation of the oil and gas contract shall be conducted within 90 days as from the date of notification of the bidding results. Past this time limit, if the negotiation of the oil and gas contract with the bid winner has not yet been completed, Vietnam Oil and Gas Corporation shall report such to the Prime Minister, asking for permission to start the negotiation with the second-ranking bidder or cancel the bidding results and reorganize the bidding. In special cases, the bid-soliciting party may ask for the Prime Minister�s permission to prolong the negotiation process. The prolonged duration of negotiation shall not exceed 60 days after the prolongation is permitted by the Prime Minister.

Chapter III

BIDDER APPOINTMENT

Article 20.- Procedures for bidder appointment

The bidder appointment shall be conducted according to the following steps:

- The bid-soliciting party shall submit to the Prime Minister the bidder appointment, clearly stating the area or block subject thereto, the reasons therefor, the to be-appointed partner and the bid-assignment norms and conditions.

- The Prime Minister shall consider and decide the bidder appointment based on the appraisal report of the Ministry of Planning and Investment and the written opinions of the concerned agencies.

- To negotiate the oil and gas contract.

Chapter IV

IMPLEMENTATION PROVISIONS

Article 21.- The bid-soliciting party

The bid-soliciting party is the bid-organizing body, having the responsibility to elaborate the bidding plan, prepare and distribute bidding dossiers, supply documents and information on the block open to bidding to bid-participating organizations and individuals, receive and manage bids, organize bid evaluation and negotiation of oil and gas contracts after the bidding results are approved. Pending a new decision of the Prime Minister, the Vietnam Oil and Gas Corporation shall act as the bid-soliciting party.

Article 22.- Guarantee for bid participation

Bidders shall not have to pay guarantee for bid participation.

Article 23.- Implementation effect

This Regulation shall apply to the selection of partners for signing oil and gas contracts in order to implement oil and gas prospection, exploration and exploitation projects.

The Bidding Regulation issued together with Decree No. 88/1999/ND-CP of September 1, 1999 and Decree No. 14/2000/ND-CP of May 5, 2000 shall not apply to the bidding for oil and gas prospection, exploration and exploitation projects.

Article 24.- Inspection and handling of violations

The bid-soliciting party shall have to observe this Regulation. The bidding result-appraising agencies shall have to inspect such observance through the process of appraising the bidding results so as to report thereon to the Prime Minister for consideration and handling. The report on the Regulation observance shall constitute a separate session of the bidding result-appraisal report. All violations of the Regulation shall be handled according to current legislation.

On behalf of the Government

Prime Minister
PHAN VAN KHAI